Summer Activities That Could Impact Next Year’s Tax Return

Summer is a time for fun, but there is never a wrong time to be thinking about taxes – and some summer activities could have an impact.  Here are a few summertime activities and tips on how taxpayers should consider them for tax season.

 

Marriage

First, report any name change to the Social Security administration. Next, notify the United States Postal Service, employers and the IRS of any address change. To officially change your mailing address with the IRS, you must complete and submit Form 8822, Change of Address.

 

Summer day camp

If you are sending a child to summer day camp, the cost may count toward the Child and Dependent Care Credit.

 

Business Travel

Kids may have the summer off, but parents generally don’t – and business travel happens year-round.  Tax deductions are available for certain people who travel away from their home or main place of work for business reasons.  Whether a business traveler is away for a few nights or all summer long, it’s important for them to remember the tax rules related to business travel.

 

Part-time Work

While part-time workers may not earn enough to owe federal income tax, they should file a tax return to get any refund they may be owed.

 

Home Improvements

If you make qualified energy efficient improvements to your home after January 1, 2023, they may qualify for a tax credit up to $3,200.

 

These types of improvements include Energy Efficient Home Improvement Credits for things like water heaters, exterior windows and doors and heating and air conditioning installations.  Residential Clean Energy Credits are available for people who install solar water heaters, fuel cells and battery storage or solar, wind and geothermal power generation.

Understanding Homeowner's Insurance

Purchasing homeowner’s’ insurance, it not only critical for protecting your home, your personal property, and against any potential liability, but if you have a mortgage, your lender will require it.

What’s Covered

A homeowner’s insurance policy is a package of coverages, including:

  • Dwelling: Covers damages to your house and any attached structures, including fixtures such as plumbing, electrical and HVAC systems.
  • Other Structures: Pays for damage to unattached structures, including a detached garage, tool shed, fence, etc.
  • Personal Property: Covers personal possessions such as appliances, furniture, electronics, clothes, etc.
  • Loss of Use: Reimburses for additional living expenses while you are unable to live in your home.
  • Personal Liability: Pays claims if you are found liable for injuries or damages to another party.
  • Medical Payments: Pays the medical bills incurred by people who are hurt on your property or by your pets.

Remember, these coverages pertain only to losses caused by peril covered by your policy.  For instance, if your policy doesn’t cover earthquake damage, then losses will not be reimbursed.

 

Types of Homeowner’s Policies

The types of covered perils will depend on the type of policy you buy.

The Special Form is the most popular policy since it insures against all perils, except those specifically named in the policy.  Common exclusions include earthquake and floods.  Typically, flood insurance is obtained through the National Flood Insurance Program, while earthquake coverage may be obtained through an endorsement or a separate policy.

 

Limits of Coverage

Your policy will impose limits on the amount of covered losses. If you have a valuable art collection or jewelry, you may want to secure additional insurance on those items.

 

Be aware of whether your policy insures for replacement cost (pays the cost to rebuild your home or repair damages using materials of similar kind and quality) or actual cash value (home value based on age and wear and tear), which may not cover all your losses.

For assistance with financial and investment planning, contact:

 

Jeffrey Manzella, AIF®, CFP®

Executive Director of Financial Planning

(586) 254-2010

jmanzella@30kwealth.com

Quickbooks Corner

Combining Related Accounts

Merging similar accounts in QuickBooks can be a useful tip for streamlining your accounting processes.  It can help to avoid duplicate entries, simplify reporting, and ensure accurate financial records.  With this feature, you can combine accounts that have similar names or transactions into a single account, eliminating the need for manual data entry or complex reconciliations.  This can save you time and reduce the risk of errors in your accounting.

To merge accounts in QuickBooks, select the accounts you want to merge, choose the Merge Accounts option, and follow the onscreen prompts.